Correlation Between AMCON Distributing and Dana
Can any of the company-specific risk be diversified away by investing in both AMCON Distributing and Dana at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining AMCON Distributing and Dana into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between AMCON Distributing and Dana Inc, you can compare the effects of market volatilities on AMCON Distributing and Dana and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in AMCON Distributing with a short position of Dana. Check out your portfolio center. Please also check ongoing floating volatility patterns of AMCON Distributing and Dana.
Diversification Opportunities for AMCON Distributing and Dana
0.69 | Correlation Coefficient |
Poor diversification
The 3 months correlation between AMCON and Dana is 0.69. Overlapping area represents the amount of risk that can be diversified away by holding AMCON Distributing and Dana Inc in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Dana Inc and AMCON Distributing is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on AMCON Distributing are associated (or correlated) with Dana. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Dana Inc has no effect on the direction of AMCON Distributing i.e., AMCON Distributing and Dana go up and down completely randomly.
Pair Corralation between AMCON Distributing and Dana
Considering the 90-day investment horizon AMCON Distributing is expected to generate 2.96 times less return on investment than Dana. In addition to that, AMCON Distributing is 1.09 times more volatile than Dana Inc. It trades about 0.14 of its total potential returns per unit of risk. Dana Inc is currently generating about 0.47 per unit of volatility. If you would invest 858.00 in Dana Inc on September 13, 2024 and sell it today you would earn a total of 407.50 from holding Dana Inc or generate 47.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
AMCON Distributing vs. Dana Inc
Performance |
| Timeline |
| AMCON Distributing |
| Dana Inc |
AMCON Distributing and Dana Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with AMCON Distributing and Dana
The main advantage of trading using opposite AMCON Distributing and Dana positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if AMCON Distributing position performs unexpectedly, Dana can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Dana will offset losses from the drop in Dana's long position.| AMCON Distributing vs. Steven Madden | AMCON Distributing vs. Vera Bradley | AMCON Distributing vs. Caleres | AMCON Distributing vs. Wolverine World Wide |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.
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